Digital for all now

Public sector digitisation: 6 levers to make billions in cost savings

Econocom 19 Jan 2015

Exploiting the full potential of government digitisation could generate up to $1 trillion annually in economic value worldwide, according to a McKinsey report. The report identified the obstacles to this transformation that need to be tackled and gives an overview of the best practices implemented by countries that have successfully made the transition.
Public sector digitisation could result in billions of dollars of cost savings worldwide, through improved cost and operational performance, by implementing shared services, greater collaboration and integration, improved fraud management, and productivity enhancements. With budgetary pressures constantly increasing, governments cannot afford to miss out on making such savings.



Online public services: minimal cost and huge benefits



Over 130 countries currently offer online public services to meet citizen demand for easily-accessible, information, at low or no cost. Considerable progress has been made in this area, particularly in terms of providing access for rural populations, improving quality of life for those with physical infirmities, and offering options for people with work and lifestyle demands that don’t fall within typical daytime office hours.
For example, Estonia’s 1.3 million residents can use electronic identification cards to vote, pay taxes and access more than 160 services online, from unemployment benefits to property registration.
And yet despite the progress made, most governments have yet to capture the full benefits of digitisation. To do so, McKinsey recommends that they take their digital transformations deeper, beyond the provision of online services through e-government portals, into the broader business of government itself.



“Digital for All, Now” in the public sector: the challenges



There are a number of difficulties specific to the public sector, due to additional management issues and longer project implementation timelines than in the private sector, and the challenge of maintaining strategic continuity as political administrations change.
Another issue is that systems and data are owned by different departments and functions, on a range of platforms and with differing taxonomies and access requirements, making it difficult to invest at scale and generate sufficient economies. Similarly, the absence of a central owner for nationwide IT infrastructure and common components can make it hard to create a seamless experience for the end user.
Furthermore, the complexity of large-scale digital projects requires specialised skills and expertise that are costly and often in short supply. Consequently, many e-government efforts fail to deliver the benefits they promise.


The 6 most important levers for digitisation

Despite these challenges, a number of successful government initiatives show that by translating private-sector best practices into the public context it is possible to achieve broader and deeper public-sector digitisation. McKinsey identifies six levers for a successful digitisation:
1.    Win government-wide and agency-deep commitment to specific digital targets
2.    Establish government-wide coordination of IT investments.
3.    Redesign processes with the end user in mind.
4.    Hire and nurture the right talent.
5.    Use big data and analytics to improve decision making.
6.    Protect critical infrastructure and confidential data.




By implementing such measures, governments could generate billions in cost savings. Among others, McKinsey cites the example of one particularly successful digital initiative: the launch of in 2012, one of the most accessible digital government services in the world. According to government estimates, the site saved £42 million (€54 million) in government spending within a year of its launch.




Photo Credits: Doug (Flickr / Licence CC by 2.0)

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